Mining engineer graduates top pay poll with $140,00

SYDNEY - Australian mining engineers fresh out of college are earning as much as 60 per cent more than graduates hired by investment banks as China's commodities boom saps talent sought by producers such as BHP Billiton.

The Minerals Council of Australia says newly qualified mining engineers are earning as much as A$130,000 ($143,000) a year.

Investment banks pay recruits about A$90,000.

Australian universities are producing 50 per cent fewer mining engineers than in the late 1990s, when the dot-com era lured students into computing.

Now mining companies are hunting from Amsterdam to Chennai for graduates.

BHP Billiton said higher salaries would contribute to a 29 per cent increase in the cost of an Australian nickel project.

"We have almost a record low number of students being produced this year, which is exactly the time the mining industry wants them," said Mike Hood, a professor of mining at the University of Queensland.

"Four years ago, there were few students who had any interest in studying mining or minerals engineering.

"Those people are graduating this year."

Full-time jobs in Australia's mining industry reached 119,147 in August, up 31 per cent from a year earlier.

Kevin Tuckwell, executive director of the Minerals Council's tertiary education steering committee, said 110 mining engineers graduated from six universities last year, compared with 205 four years earlier.

"Present demand is for 160-plus," he said. "We're predicting there will 130 graduates in 2007.

"We are seeing an upturn in enrolments, but not at the level we thought it might, considering the hype that's been given to the resources boom."

Graduates from the West Australian School of Mines in Kalgoorlie are receiving about seven job offers each.

Soaring global demand for coal, iron, aluminium, copper, oil and gas, led by China's expanding economy, have left producers with too few employees to drive expansion.

In Australia, Government figures show mineral and energy producers, including Xstrata and Woodside Petroleum, had either begun or were about to start on 74 projects costing A$22.6 billion ($24.9 billion) as at April 30.

That is about three times the number of projects that companies had committed to five years ago.

Another 155 projects, worth A$84 billion, were under consideration in April.

Developing the Ravensthorpe mine and expanding the Yabulu refinery will cost Melbourne-based BHP Billiton US$1.8 billion, or US$400 million more than an earlier estimate.

Higher salaries for engineers and contractors compounded cost increases caused by the stronger local dollar and higher steel prices.

"Labour rates have escalated" in the past two years, said Chris Pointon, president of BHP Billiton's stainless steel materials division.

"Productivity is also generally lower as less-experienced workers are attracted to the industry."

To mitigate the situation, he said BHP was "providing the highest possible standard of accommodation" and offering shorter rosters.

Newcrest Mining, the country's biggest gold producer, said higher costs and interest charges would erode a jump in revenue from the A$1.4 billion Telfer mine begun in West Australia in February.

The Australian Government, concerned about the effect on inflation of rising wage costs, has responded to the skilled-labour shortage with an advertising campaign in Britain, the Netherlands, Germany and India.

"As you soon as you mention you're a mining engineer, they just jump at you," said Jonathan Engels, 25, a mining engineering student at the University of Leeds who attended a jobs fair at Australia House in London last week.

"They want your CV and want to know when you can move out."

Engels is applying for jobs in Australia with BHP and Rio.

- BLOOMBERG